In early 2018 the BC Civil Resolution Tribunal published its decision on The Owners, Strata Plan NW 2729 v Haddow et. al (“Haddow“). This decision dealt with the implementation of the new budget following an annual general meeting held after the new fiscal year has begun. In his original decision, J. Garth Cambrey, Vice Chair of the Civil Resolution Tribunal, ordered the strata corporation could not collect the adjustment portion of a strata fee increase (i.e. the difference between the previous fees and the new fees approved at the annual general meeting).

The result of this decision within the industry was confusion about whether or how strata fee adjustments should be made when the annual general meeting is held after the new fiscal year has begun.

In 625536 B.C. Ltd. v. The Owners, Strata Plan LMS4385, the BC Supreme Court overturned the BCCRT decision in Haddow. In this new decision, the Supreme Court dealt with near identical circumstances as those dealt with by the BCCRT:

the strata corporation held its annual general meeting within the 60 day period following the fiscal year end;

owners continued to pay their fees approved in the previous annual budget until the annual general meeting;

the new budget was approved at the annual general meeting, including an increase to the monthly strata fees; and

the strata corporation invoiced owners for their new strata fees, plus an adjustment for the difference between the previous fees and the new fees for the payments made after the start of the new fiscal year until the annual general meeting.

At paragraphs 28-30 G.C. Weathrill J. stated:

[28] In Haddow, the Tribunal based its determination in large part of the notion that the strata fee information required to be disclosed in a Form B or Form F would be inaccurate if a prospective purchaser of a strata unit obtained those forms (a Form F remains “current” for a period of 60 days after it is issued: Act s. 115(2)) prior 625536 B.C. Ltd. v. The Owners, Strata Plan LMS4385 Page 9 to the approval of a new budget. The buyer would be led to believe that the seller’s strata fee payment obligation was up-to-date when in fact it was not.

[29] With the greatest of respect to the Tribunal, I disagree. An owner’s strata fee obligation does not arise until it is approved at the AGM. The Form F (and indeed the Form B) will have been accurate when issued. The Tribunal in Haddow appears to have begun its analysis based upon the conclusion that the fees had been imposed retroactively. In my view they were not.

[30] There is no requirement in the Act that strata fees be paid in equal installments. Plainly, the schedule of strata fee payments can require equal monthly installments, or installments that include adjustments to make up a deficit between what was paid and what would have been paid had the budget for the current fiscal year been in place at the commencement of the current fiscal year. Fees for one month may be different than for other months.

Inspire Property Management has always recommended to our clients, if the bylaws do not address this issue, that the motion approving the budget also include clear approval of the date that the new fees will be implemented, including the one-time, higher installment to make-up for the lower strata fees charged since the beginning of the new fiscal year until that date. The BC Supreme Court decision did not order so strict an approval requirement. But, it did affirm that the strata corporation has clear authority to collect an “adjustment” to strata fees.

[33] In my view, a full answer to the petitioners’ argument is this: the 2017 Budget did not establish a new fee schedule for only the period after the AGM – it established a new fee schedule for the entire fiscal year, commencing July 1, 2017. The October 2017 invoices did nothing more than require payment of the fees that were approved by the owners.

The Court unfortunately did not directly address the “due date” for the adjustment portion of the fees. It appears from this decision that if the strata fee schedule does not directly address the due date, the adjustment portion may apply in one of three ways:

directly following the annual general meeting;

on the date specified by the strata council; or

on the 1st day of the month following the annual general meeting (assuming the strata corporation operated under the Standard Bylaws).

Considering the above, Inspire Property Management recommends that strata corporations clearly indicate the date that the adjustment portion of a fee increase is payable in either the resolution approving the budget or on the strata fee schedule attached to the budget. This may be critical to avoid confusion about the amount to report as outstanding on a Form B – information certificate or Form F -certificate of payment that is issued between the annual general meeting and the 1st day of the month following the AGM.

Links

A copy of this decision may be viewed on Canadian Legal Information Institute website, www.canlii.org.

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